When your home has been partially or totally destroyed from a peril covered by your insurance contract or policy, you have the right to expect to receive financial support from the insurer toward restoring your home to the condition that it was prior to the loss.

The only fair amount that an insurance company should pay for loss to real property (and that an insured should expect to be paid) is the cost for repair and restoration work that the specialists who undertake the project agree to work for. Sometimes, insurance contracts will allow for reasonable depreciation … but the figure from which the depreciation is made or settlement is awarded should be the actual cost of restoring the property and not an arbitrary estimated amount.

Sometimes, their adjusters who work on their behalf will encourage home owners to agree to settlements that will provide less than what they are entitled to and that can appear to be reasonable … but are not.

For instance, many insurance company adjusters will rely upon and use computer software or publications that claim to represent costs for various incidents, materials and tasks and that are periodically updated by telephone surveys. The errant suggested costs from these computer programs are what the insurance company’s adjusters will often use to base their settlement offers.

These estimating applications are often incomplete, inaccurate and unreliable and will likely be used to represent the company’s first offer of settlement. Unsuspecting home owners will feel obligated to accept these lowball offers … particularly when they are in a hurry for cash.

Sometimes, the insurance company will hire retired or former contractors and will pay them to provide “estimates” for repairing or restoring the home. Many of these folks have not been directly involved with the actual repair or restoration process for many years and lack current knowledge of material costs and procedures. They are also unlikely to be the professionals who are going to be performing the actual work. Additionally, being paid by the insurance company for their bid and their future referrals provides some of these folks with an incentive to provide low and unrealistic “estimates”.

Sometimes the insurer will offer a lump sum “cash out” that will (with quick and fast money) provide the home owner with the enticement to accept a fast settlement that will provide less than the required amount to fully restore their home to the original condition. The idea of lower payments for “do-it-yourself” repair work provides the insurer with a lower payment while leaving the home owner on his own to seek and use lower quality and cheaper materials, inexperienced labor and with no warranty on the final work. This is never a good idea.

Remember, the only fair fair amount that an insurance company should pay (and that you should accept) is the price for repair and restoration work that the specialists who undertake the project agree to work for.

If you feel that you have been underpaid for a recent claim and you live in the State of Missouri, contact me. I will be happy to review your claim and let you know if there are additional steps that can be taken to assist you in receiving all that you are entitled to from your insurance company as a result of your loss.